Romania

Old Age, Disability, and Survivors

Regulatory Framework

First law: 1912.

Current laws: 2000 (social insurance), implemented in 2001; and 2004 (pensions), with 2005 and 2007 amendments.

Type of program: Social insurance and individual account system.

Note: A new system consisting of a social insurance first pillar plus a second pillar of individual accounts was implemented on January 1, 2008. Participation in the new system is mandatory for all employed and self-employed persons aged 35 or younger on January 1, 2008. Participation in the new system is voluntary if between ages 35 and 45. Those not participating in the new system remain in the old social insurance system.

Coverage

Employed persons with individual labor contracts; civil servants; judges; diplomatic personnel; certain officials within the executive, legislative, and judicial authorities; craft cooperative members; unemployment benefit recipients; and any worker (excluding farmers) with annual earnings equal to at least three times the national average wage.

Voluntary coverage for persons, including farmers, without compulsory coverage.

Special systems for lawyers and other professionals, military personnel, and the clergy.

Individual account: 2% of gross earnings is taken from the 9.5% of gross earnings contributed to social insurance. (The contribution for the individual account will increase by 0.5% of gross earnings each year until it reaches 6% of gross earnings in 2016; likewise, the contribution to social insurance will decrease each year by 0.5% of gross earnings until it reaches 5.5% of gross earnings in 2016.)

In addition, pension fund administrators may charge up to a maximum of 2.5% of contributions and a maximum of 0.05% of net assets under management per month for administrative fees.

There are no minimum or maximum earnings for contribution purposes.

Self-employed person

Social insurance: 29% of insured income (social insurance only).

There are no minimum or maximum earnings for contribution purposes.

Individual account: 2% of gross earnings is taken from the 29% of gross earnings contributed to social insurance. (The contribution for the individual account will increase by 0.5% of gross earnings each year until it reaches 6% of gross earnings in 2016; likewise, the contribution to social insurance will decrease each year by 0.5% of gross earnings until it reaches 25% of gross earnings in 2016.)

In addition, pension fund administrators may charge up to a maximum of 2.5% of contributions and a maximum of 0.05% of net assets under management per month for administrative fees.

There are no minimum or maximum earnings for contribution purposes.

Employer

Social insurance: The contribution rate on behalf of employees varies depending on working conditions: 29% of gross earnings for normal conditions, 34% of gross earnings for arduous conditions, or 39% of gross earnings for very arduous conditions.

There are no minimum or maximum earnings for contribution purposes.

Individual account: None.

Government

Social insurance: Any deficit.

Individual account: None.

Qualifying Conditions

Old-age pension (social insurance): Age 63 and 3 months with at least 11 years of contributions (men) or age 58 and 3 months with at least 10 years and 9 months of contributions (women). The full pension is paid with 32 years of contributions (men) and 26 years and 9 months of contributions (women).

The pensionable age is rising gradually to age 65 (men and women) by December 2014 (women) and January 2015 (men). The minimum contribution period is also rising gradually to 15 years (men and women) by 2014 (women) and 2015 (men). The contribution period for the full pension is rising gradually to 35 years by 2015 (men) or to 30 years by 2014 (women).

Coverage is credited for certain periods, including periods during which social insurance benefits are received and for periods of university study, military service, or imprisonment.

Lower age requirements apply to persons employed in arduous or dangerous work, persons who are disabled or visually impaired, persons who were imprisoned because of their political beliefs, teachers (under certain conditions), and women who have given birth to three or more children (under certain conditions and if eligible for the full pension).

Early pension: Paid from up to 5 years before the normal retirement age if the insured's number of paid contributions exceeds the number of contributions required for the full pension by at least 10 years.

Partial early pension: Paid from up to 5 years before the normal retirement age if the insured's number of paid contributions exceeds the number of contributions required for the full pension by less than 10 years.

Old-age pension (individual account): Age 63 and 3 months (men) or age 58 and 3 months (women). The pensionable age is rising gradually to age 65 (men and women) by December 2014 (women) or January 2015 (men).

Disability pension (social insurance): Paid for the loss of at least 50% of working capacity as the result of an accident (including work-related accidents), diseases (including occupational diseases), tuberculosis, or revolutionary events. For school pupils, apprentices, and students, only disabilities resulting from work are covered. For the victims of revolutionary events, coverage is provided only to those who have contributed to the program. Prior contribution conditions vary according to the insured's age when the disability began. Contribution conditions are waived if the disability is the result of a work accident, an occupational disease, tuberculosis, or military service.

Disability pension (individual account): Paid if assessed as permanently disabled and incapable of any work.

Survivor pension (social insurance): The insured was eligible for a pension or was a pensioner at the time of death.

Eligible survivors are a widow(er) who satisfies the age and marriage conditions or is disabled (waived if the death is caused by a work accident, an occupational disease, tuberculosis, or if the survivor has a dependent child younger than age 7) and children up to age 16 (age 26 if a student, depending on the duration of studies; no limit if disabled). A limited pension is paid for 6 months to a low-income uninsured spouse who does not satisfy the age and marriage conditions.

Funeral grant (social insurance): Paid for the death of the insured or the insured's dependent, subject to contribution conditions. The benefit is paid to an eligible survivor, to the deceased's legal heir, or to the person who paid for the funeral.

Survivor pension (individual account): If the insured dies before receiving a benefit from the individual account, the value of his or her accumulated assets is split and transferred to the individual accounts of eligible survivors.

Old-Age Benefits

Old-age pension (social insurance): The pension is based on the insured's average lifetime accumulated number of pension points multiplied by the pension point value in force at the date of retirement. The number of pension points obtained during 1 year is equal to the insured's monthly average wage divided by the national monthly average wage. At retirement, the average number of pension points is calculated by dividing the insured's total lifetime accumulated number of pension points by the number of years of contributions.

The minimum pension point value must not be less than 37.5% of the national monthly average wage.

Early pension: The early pension is calculated in the same way as the old-age pension. Credited covered periods are not taken into account for pension calculation purposes.

Partial early pension: A reduced pension is paid. Credited covered periods are not taken into account for pension calculation purposes.

Old-age benefits are payable abroad under bilateral agreement.

Benefit adjustment: Benefits are adjusted annually in December according to changes in the pension point value, which is linked to the expected inflation rate for the coming year.

Old-age pension (individual account): At the normal pensionable age, the insured receives a monthly pension for life based on the value of the accumulated capital minus fees. If the calculated monthly pension is lower than a prescribed monthly minimum, a lump sum may be paid or a limited pension paid for up to 5 years.

Permanent Disability Benefits

Disability pension (social insurance): The pension is based on the total (paid and credited) lifetime number of accumulated pension points. The number of pension points obtained during 1 year is equal to the insured's monthly average wage divided by the national monthly average wage. In addition, for each year that the disability began before the insured has the required number of contributions for the full pension, the insured is credited with 0.75 pension points for a 1st degree disability (incapacity for any work and requiring constant attendance), 0.6 pension points for a 2nd degree disability (incapacity for any work but not requiring constant attendance), or 0.4 pension points for a 3rd degree disability (incapacity for usual work). The average lifetime number of pension points is calculated by dividing the insured's total lifetime number of accumulated pension points by the number of years of contributions. The pension is based on the insured's average lifetime number of pension points multiplied by the pension point value in force on the date the disability began.

The minimum pension point value must not be less than 37.5% of the national monthly average wage.

The minimum pension point value is 581.30 new lei.

Constant-attendance supplement: If the insured is assessed with a 1st degree disability, a lump sum of 310 new lei is paid.

At the pensionable age, the insured can opt for a disability pension or an old-age pension, whichever is greater. If the insured is assessed with a 1st degree disability, the constant-attendance allowance continues to be paid under either option.

Insured persons receiving a 3rd degree disability pension can combine the pension with earnings from gainful employment. There is no income test.

Disability benefits are payable abroad under bilateral agreement.

Benefit adjustment: Benefits are adjusted annually in December according to changes in the pension point value, which is linked to the expected inflation rate for the coming year.

Disability pension (individual account): The insured receives a monthly pension based on the value of the accumulated capital minus fees. If the calculated monthly pension is lower than a prescribed monthly minimum, a lump sum may be paid or a limited pension paid for up to 5 years.

Survivor Benefits

Survivor pension (social insurance): The pension is based on the old-age pension paid or payable to the deceased. If the deceased was not eligible for the old-age pension or was receiving a disability pension or an early old-age pension, the survivor pension is based on the 1st degree disability pension. The pension amount is calculated as a percentage of the average lifetime number of pension points accrued to the deceased. That percentage varies according to number of eligible survivors: for one survivor, 50%; for two survivors, 75%; or for 3 or more survivors, 100%.

If the survivor is also eligible for an old-age pension in his or her own right, the greater of the two benefits is paid. Full orphans receive a pension for each insured parent.

Survivor benefits are payable abroad under bilateral agreement.

Benefit adjustment: Benefits are adjusted annually in December according to changes in the pension point value, which is linked to the expected inflation rate for the coming year.

Funeral grant (social insurance): A lump sum of 1,550 new lei is paid for the insured's funeral; the grant is reduced by 50% for the funeral of the insured's dependent.

Survivor pension (individual account): If the insured dies before receiving a benefit from the individual account, the value of his or her accumulated assets is split and transferred to the individual accounts of eligible survivors.

Administrative Organization

Social insurance

Ministry of Labor, Family, and Equal Opportunities (http://www.mmssf.ro) is responsible for general supervision and policy development.

National Pension and Social Insurance Fund (http://www.cnpas.org), with regional pension funds, administers the program.

Medical benefits: All persons residing in Romania, including foreign nationals permanently residing in the country.

Voluntary coverage for temporary residents and for diplomatic staff accredited in Romania.

Source of Funds

Insured person

Cash benefits: None.

Parental leave: None.

Medical benefits: 6.5% of earnings.

Self-employed person

Cash benefits: 0.85% of earnings.

Parental leave: None.

Medical benefits: 5.5% of earnings.

The self-employed person's contributions for medical benefits also finance work injury medical benefits.

Employer

Cash benefits: 0.85% of covered payroll.

Parental leave: None.

Medical benefits: 5.5% of covered payroll.

The employer's contributions for medical benefits also finance work injury medical benefits.

Government

Cash benefits: None.

Parental leave: The total cost.

Medical benefits: Subsidizes deficits. The National Agency for Employment, which administers the unemployment insurance program (below), pays 0.75% of its operational surplus to the National Health Insurance Fund.

Qualifying Conditions

Cash sickness benefits: The insured must have at least 6 months of contributions in the 12 calendar months before the incapacity began; no qualifying conditions apply for emergency surgery and in cases of tuberculosis, AIDS, or other contagious illnesses.

Coverage is credited for certain periods, including periods during which social insurance benefits are received and for periods of university study, military service, or imprisonment.

Illness prevention and rehabilitation for work benefit: Paid to a person undergoing temporary rehabilitation through placement in an alternative job.

Cash maternity benefits: The insured must have at least 1 month of contributions in the last 12 months.

Maternity risk benefit: Paid to a pregnant worker or to an employed mother to protect the health of the mother or her child.

Parental leave: Awarded to persons residing in Romania who have earned taxable income in the 12 months before the date of childbirth, contributed to the social insurance program, or received an unemployment benefit or a social insurance benefit.

Child care allowance: Paid to provide care for a sick child younger than age 7 (age 18 if disabled).

Medical benefits: Must have at least 1 month of contributions in the last 12 months; no qualifying conditions apply for certain categories of residents, for emergency surgery, and in cases of tuberculosis, AIDS, or other contagious illnesses.

Sickness and Maternity Benefits

Sickness benefit: The benefit is equal to 75% of the insured's average monthly earnings (100% for emergency surgery, tuberculosis, AIDS, and other contagious illnesses). The benefit is paid for a maximum of 183 days a year for each illness; may be extended in some cases.

Average monthly earnings are equal to average earnings in the last 6 months before the incapacity began. The maximum monthly earnings for benefit calculation purposes are equal to 12 times the national gross minimum monthly wage.

Illness prevention and rehabilitation for work benefit: The benefit comprises two elements: temporary rehabilitation through placement in an alternative job and a cash benefit to replace part of the earnings lost as a result of a reduction in working hours. The value of each benefit must not exceed 25% of the insured's average monthly earnings in the 6 months before the incapacity began. Benefits are paid for a maximum of 90 days a year. A benefit equal to 75% of the insured's average monthly earnings in the 6 months before the incapacity began is awarded to persons in quarantine.

Average monthly earnings are equal to average earnings in the last 6 months before the incapacity began. The maximum monthly earnings for benefit calculation purposes are equal to 12 times the national gross minimum monthly wage.

Maternity benefit: The benefit is equal to 85% of the insured's average monthly earnings in the 6 months before the expected date of childbirth. The benefit is paid for a maximum of 120 days.

Average monthly earnings are equal to average earnings in the last 6 months before the incapacity began. The maximum monthly earnings for benefit calculation purposes are equal to 12 times the national gross minimum monthly wage.

Maternity risk benefit: 75% of the insured's average monthly earnings is paid for up to 120 days.

Average monthly earnings are equal to average earnings in the last 6 months. The maximum monthly earnings for benefit calculation purposes are equal to 12 times the national gross minimum monthly wage.

Parental leave: 600 new lei a month is paid until the child is age 2 (age 3 if disabled).

If the insured parent resumes gainful activity, the benefit is suspended and is replaced by an income supplement of 100 new lei a month.

Child care allowance: The allowance is equal to 85% of the insured's average monthly earnings in the 6 months before the claim. The benefit is paid for a maximum of 45 days per calendar year (may be extended subject to conditions) for a child younger than age 7; age 18 if disabled.

Average monthly earnings are equal to average earnings in the last 6 months before the incapacity began. The maximum monthly earnings for benefit calculation purposes are equal to 12 times the national gross minimum monthly wage.

Work Injury

Regulatory Framework

Coverage

Employed persons, public employees (including those in executive, legislative and judiciary branches), members of cooperatives, persons receiving unemployment benefits, children in full-time education, apprentices, students undergoing occupational training, and military conscripts.

Voluntary coverage is possible for self-employed persons and agricultural workers.

Source of Funds

Self-employed person: Voluntary contributions of 1% of the average monthly income.

Employer: Between 0.4% and 2% of average gross monthly income, according to the assessed degree of risk.

Government: Provides subsidies.

Qualifying Conditions

Work injury benefits: There is no minimum qualifying period. The insured must have at least a 50% loss in working capacity as the result of a work injury or an occupational disease.

Temporary Disability Benefits

The benefit is equal to 80% of the insured's mean wage in the 6 calendar months before the disability began and is paid from the first day of disability for up to 180 days a year. If the insured has to undergo emergency medical treatment, the benefit is equal to 100% of the insured's mean wage. The benefit is paid by the employer until recovery or the certification of permanent disability.

Permanent Disability Benefits

Permanent disability pension: The pension is based on the total (paid and credited) lifetime number of accumulated pension points. The number of pension points obtained during 1 year is equal to the average insured monthly wage divided by the legal monthly national average wage. In addition, for each year that disability began before the insured has the required number of contributions for the full pension, the insured is credited with 0.75 pension points for a 1st degree disability (incapacity for any work and requiring constant attendance), 0.6 pension points for a 2nd degree disability (incapacity for any work but not requiring constant attendance), or 0.4 pension points for a 3rd degree disability (incapacity for usual work). The average lifetime number of pension points is calculated by dividing the total lifetime number of accumulated pension points by the number of years of contributions. The pension is based on the average lifetime number of pension points multiplied by the pension point value in force on the date the disability began.

The minimum pension point value must not be less than 37.5% of national monthly average wage.

The minimum pension point value is 581.30 new lei.

Constant-attendance supplement: If the insured is assessed with a 1st degree disability, a lump sum of 310 new lei is paid.

At the pensionable age, the insured can opt to receive the permanent disability pension or the old-age pension, whichever is greater. If the insured is assessed with a 1st degree disability, the constant-attendance allowance continues to be paid under either option.

Insured persons receiving a 3rd degree disability pension can combine the pension with earnings from gainful employment. There is no income test.

Benefits are payable abroad under bilateral agreement.

Benefit adjustment: Benefits are adjusted annually in December according to changes in the pension point value, which is linked to the expected inflation rate for the coming year.

Workers' Medical Benefits

Medical services are provided directly to patients by local health insurance funds. Medical benefits include general and specialist care, outpatient care, hospitalization, medicines, appliances, rehabilitation, transportation, and other services.

Survivor Benefits

Survivor pension: The pension is based on the old-age pension payable to the deceased. If the deceased was not eligible for the old-age pension or was receiving a disability pension or an early old-age pension, the survivor pension is based on the 1st degree disability pension. The pension amount is calculated as a percentage of the average lifetime number of pension points accrued to the deceased. That percentage varies according to number of eligible survivors: for one survivor, 50%; for two survivors, 75%; or for 3 or more survivors, 100%.

If the survivor is also eligible for an old-age pension in his or her own right, the greater of the two benefits is paid. Full orphans receive a pension for each insured parent.

Benefits are payable abroad under bilateral agreement.

Benefit adjustment: Benefits are adjusted annually in December according to changes in the pension point value, which is linked to the expected inflation rate for the coming year.

Funeral grant: A lump sum of 1,550 new lei is paid for the insured's funeral; the grant is reduced by 50% for the funeral of the insured's dependent.

Administrative Organization

National Pension and Social Insurance Fund (http://www.cnpas.org), with regional pension funds, administers the program.

Unemployment

Regulatory Framework

First law: 1991.

Current law: 2002 (unemployment insurance).

Type of program: Social insurance system.

Coverage

Employed persons with individual labor contracts; civil servants; military personnel; certain officials within the executive, legislative, and judicial authorities; craft cooperative members; young graduates; and any worker (excluding farmers) with annual earnings equal to at least nine times the national average wage (9,693 new lei).

Voluntary coverage for self-employed persons, family labor, Romanian citizens working abroad, and any worker without compulsory coverage.

Source of Funds

Insured person: 0.5% of covered salary.

The maximum earnings for contribution purposes are equal to five times the national monthly average wage (5,385 new lei).

The national monthly average wage is 1,077 new lei.

Self-employed person: 1.5% of declared covered income.

The maximum earnings for contribution purposes are equal to five times the national monthly average wage (5,385 new lei).

The monthly national average wage is 1,077 new lei.

Employer: 1% of covered payroll.

The maximum earnings for contribution purposes are equal to five times the national monthly average wage (5,385 new lei).

The national monthly average wage is 1,077 new lei.

Government: Any deficit.

Qualifying Conditions

Unemployment benefits: The insured must have at least 12 months of contributions in the last 24 months before unemployment and be involuntarily unemployed, registered at the local labor office, and actively seeking work.

First-time jobseekers older than age 18 with no independent income who have not found employment 60 days after the end of their school or university studies (30 days after the end of military service) are also eligible.

Unemployment Benefits

The benefit is equal to 75% of the national monthly minimum wage and is paid for 3 months if the insured has at least 5 years of contributions; 9 months with more than 5 years; 12 months with more than 10 years.

A supplement is paid with at least 3 years of contributions. The maximum supplement is paid for 20 years of more of contributions.

Graduate first-time jobseekers receive 50% of the national monthly minimum wage for up to 6 months.

An unemployed person who resumes full-time employment before the awarded benefit period ends receives 30% of the benefit entitlement during the remaining period.

If the new workplace is located more than 50 kilometers from the insured's home, a lump sum equal to twice the national monthly minimum wage is paid. If the new employment requires the insured to relocate, the lump sum is equal to seven times the national monthly minimum wage.

Certain other incentives in the form of subsidies, exemption from contribution payments, or access to loans under favorable conditions are awarded to certain employers to enhance job creation and encourage the recruitment of unemployed persons.

Administrative Organization

National Agency for Employment provides general supervision. Local offices administer the program.

Coverage

Source of Funds

Qualifying Conditions

Family allowances: Paid for children younger than age 18 (aged 18 or older if in full-time education or training, no limit for a person with a 1st or 2nd degree disability that began before age 18).

Income supplement (income-tested): Paid if average per capita family income is 184 new lei or less.

Single-parent allowance (income-tested): Paid to single parents if average per capita family income is 184 new lei or less.

Birth grant: Paid to a mother for the birth of each child, for up to a maximum of four children.

Benefits for persons diagnosed with HIV/AIDS: Paid to all persons diagnosed with HIV/AIDS.

Benefits for the blind: Paid to persons assessed as blind, according to three categories of disability.

Family Allowance Benefits

Family allowances: 200 new lei a month is paid for each child up to age 2 (age 3 if disabled); 40 new lei a month (March 2008) for each child aged 3 or older (80 new lei if disabled).

Income supplement (income-tested): 38 new lei is paid for one child; 44 new lei for two; 49 new lei for three; or 54 new lei for four or more children.

Single-parent allowance (income-tested): 54 new lei a month is paid for one child, 65 new lei a month for two children, 73 new lei a month for three children, or 83 new lei a month for four or more children.

Birth grant: A lump sum of 213 new lei is paid for each live birth.

Benefits for persons diagnosed with HIV/AIDS: A child receives 9 new lei per day; an adult receives 11.20 new lei per day.

Benefits for the blind: Benefits are paid according to three degrees of assessed disability: 340 new lei for an adult with total blindness; 187 new lei for a significant reduction in eyesight; and 154 new lei for a partial reduction in eyesight.

Single persons and households with per capita income less than a fixed amount may receive cash and in-kind benefits to help toward the cost of domestic heating, subject to conditions.

Emergency assistance may be paid to persons, including refugees, assessed as needy.